Perpetual Trust has had ample time to repay $28 million loan – FMA

Market watchdog the Financial Markets Authority (FMA) says it tried to minimise investor losses by giving a Pyne Gould Corporation subsidiary time to repay a $28 million related-party loan.

But now time’s up, and investors need to know about its concerns with the loan from the cash fund of PGC’s wealth management unit Perpetual Trust and the investment vehicle (Torchlight) of PGC chairman and majority shareholder George Kerr.

The FMA has just made a statement to the NZX following the High Court discharge of confidentiality orders that were keeping details of its investigation into Perpetual Trust secret.

FMA’s statement says the loans were not in the best interests of investors in the funds and the circumstances in which they were made by Perpetual reflects a lack of judgment and lack of understanding of its role as trustee of funds of this nature.

The FMA sought to minimise losses that investors may suffer by engaging with Perpetual to seek the return of the loans.

And since April 2012, around half of the total amount lent to Torchlight has been repaid, but approximately $13 million remains outstanding.

“FMA considers Perpetual has now had ample time to secure repayment of the loans, but is concerned at the lack of progress and the consequent risk to investors," the statement says.

“FMA believes investors in the fund need to be aware of its concerns about the loans made by the fund to Torchlight and the delays in repayment, so they can make informed decisions about their investments."

FMA chief executive Sean Hughes says the authority’s actions are in line with its objective to promote the confident and informed participation of businesses, investors and consumers in the financial markets.

PGC shares – mostly held by George Kerr – are trading at 29c - valuing the company at about $60.7 million.

Perpetual Trust’s response

Pyne Gould Corporation has responded with an update to the NZX  on behalf of its wealth management unit Perpetual Trust.

The statement says Perpetual Trust does not accept the FMA”s interpretation of a $28 million interfund facility between the Perpetual Cash Management Fund (CMF) and Torchlight Fund No. 1.

“Perpetual considers that the interfund facility provides superior first-ranking security and provides a good return,” the statement says.

“However, to alleviate the concerns raised by the FMA, Perpetual has (without prejudice to its position) asked Torchlight to prepay the $28 million interfund facility in advance of the scheduled repayment in February 2013.”

Torchlight has agreed to do so, it says.

“To date, Torchlight has prepaid $15 million in cash leaving a balance of approximately $13 million outstanding. Full prepayment is expected this month.”
 

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6 Comments & Questions

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On what possible basis could any responsible trustee lend trust funds that it holds for its customers at call on uncompleted and undeveloped/partly developed projects?

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On the basis that they know they will get away with it. Although it is a criminal breach of trust who is going to prosecute them?

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Looks like the truth is hunting you down eh 'Georgie Boy'... good luck, you will need it after the details of the 'money go round' you pulled off to help collapse SCF becomes public knowledge...
No amount of brow beating by the FMA can cover up your actions... Of course the FMA should pass this onto the SFO to expose your activities. Fat chance when such a spotlight would expose more of 'Hubbardgate' publicly.
Nonetheless this is another step closer to the Hubbardgate dam bursting wide open, which it inevitably will as there are too many loose ends to cover up and too many people who KNOW the Hubbards were rolled & robbed of their wealth & dignity at the hands of unscrupulous operators such as yourself, aided & abetted by English & Key.
Lets see Machiavelli help you out of this one 'Prince Georgie Boy'.

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Lol @ Kieran John/Trass - always quick to belittle others and funnily enough you are a supporter of Hubbard.

Stick to mowing the Octagon, Kieran.

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This transaction makes Hanover and Capital and Merchant folk look conservative. Firstly who did the valuation of $21m on the Queenstown and Wanaka land? With 1500 sections to sell between Henley Downs, when its developed, and Jacks Point, what is the land truly worth and what is a reasonable LVR?

Perpetual lend $18m, first up. So that is a 90% LVR. Clearly a conservative approach. So then they advance further to $28m. Now that is more in the spirit of things. Particularly in the midst of several high profile trials of directors of finance companies. So, that's something like 160%. But, as Perpetual advise, it is a first mortgage. Investors need to be grateful for small mercies.

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Funny how the SFO are suddenly involved too now. Lets see how they treat George Kerr compared to how they treated Allan Hubbard shall we?

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